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Is a tourist tax the right response to New Zealand's tourism boom?

The tourism boom is overwhelming some of our most prized beauty spots. But what's the right solution?

For a glimpse through New ­Zealand’s tourism shop window to the promise of unrivalled natural beauty, follow the hashtag #nzmustdo. On Twitter, Facebook and Instagram, tourists do our marketing for us, posting glorious images that help sell the 100% Pure New Zealand “product” to the world.

A long, empty road winds along the shores of Lake Wakatipu; on a lonely beach by a picture-perfect Lake Pukaki, two tiny figures hold hands; at a serene and splendid Milford Sound, not a soul is to be seen; a handful of visitors tread barefoot through the golden sand of a beach in the Abel Tasman National Park.

In a crowded and increasingly urbanised world, the images tell a story of wilderness and tranquillity, and of the opportunity to connect with the natural environment. But after a succession of boom years in the ­tourism industry, peace and solitude in some of New Zealand’s most prized landscapes are becoming scarce commodities.

This country, as Tourism New Zealand marketing director Andrew Fraser points out, is “hot”. As 2016 drew to a close, the industry was expecting to have welcomed a record 3.5 million overseas visitors. There is talk of four million by next year. For his parting shot, outgoing chief executive of Tourism New Zealand Kevin Bowler told an audience in Queenstown in October that at the present growth rate, the number would reach almost seven million by 2023 – much higher than the official projection of 4.5 million by 2022.

Anyone who has been on the road around New Zealand in recent months has seen evidence of the tourist bonanza: the car park and roadside at the entrance to Punakaiki’s Pancake Rocks on the West Coast crammed with rental cars and campervans, even in the off season; visitors queuing for selfies at the tiny Church of the Good Shepherd in Tekapo; every bed in small holiday towns such as Takaka booked out for months on end; freedom campers parked under the pine trees on the shores of Lake Pukaki.

Facilities in hotspots are bursting at the seams. During the peak of the 2016 summer season, 3100 visitors turned up at Milford Sound on a typical day, and as many as 4000 at the busiest times. Basic Department of Conservation campgrounds along the ­Milford road – serviced by nothing more than a handful of toilets – hosted 55,000 campers last year.

Robin McNeill, a former Federated Mountain Clubs president, recalls staying at the New Zealand Alpine Club’s Homer Hut one night and finding the building surrounded by campervans. Their occupants explained that they’d wound up there because every other campsite along the Milford road was full. It remains to be seen whether an $800,000 upgrade and expansion of DoC’s Cascade Creek campground on the Milford road will meet the ever-growing demand.

Too much of a good thing

New Zealanders wanting to visit their own country are increasingly finding themselves crowded out of iconic locations. Fancy taking the kids on the world-famous Milford Track in the summer holidays? Last year, the huts were booked out for January in just three hours. More than two-thirds of those who complete the walk are international tourists, and on the Kepler and Routeburn tracks the proportion is over 70%. The number of people on the Great Walks in the 2015/16 season was up 48% on four years earlier. Across the nine Great Walks, 60% of users are foreign tourists.

What about an alpine experience – a climb up to Mueller Hut in Aoraki/Mt Cook National Park, perhaps, or Avalanche Peak in Arthur’s Pass National Park? Get in the queue. Mueller Hut – with 28 bunks – is a four-and-a-half-hour grunt, but last year 3500 people made the trip, 39% more than a decade ago.

Not so many years ago, a climb up Avalanche Peak would guarantee a day out with only the kea for company, but these days it’s common to have 100 or so people making the steep three- to four-hour trek, bunching up on the summit to eat their lunch and pose for photos. Some ill-equipped day walkers have been known to blindly follow overnight trampers along the exposed adjacent ridge and down a steep scree slope into the neighbouring Crow Valley. Incidents of dehydration and people being caught out after dark are not uncommon.

The three-hour Hooker Valley walk in Mt Cook National Park – where DoC spent $1.7 million upgrading the track in 2015 – attracted 82,000 people last year, according to DoC director-general Lou Sanson. More people means more demand for toilets and space to park cars and campervans.

Nowhere is the pressure of the tourism boom more evident than on the Tongariro Alpine Crossing. The numbers doing this day walk through the spectacular volcanic landscape of the North Island’s Central Plateau have been growing at a compound rate of 9% a year, and have gone from 60,000 in 2007 to an expected 130,000 in the 2016/17 season. On a typical day, the numbers reach 1500, and on three days last season, more than 2000 people completed the 20km walk. More than three-quarters of those doing the track are international visitors.

“It’s one of those places we are strangling the breath out of,” says Bubs Smith, of Ngati Hikairo ki Tongariro, one of 28 hapu within Ngati Tuwharetoa. The ancestral boundary of Smith’s hapu includes the Lake Rotoaira basin, Tongariro Forest and the northern portion of Tongariro National Park, including Tongariro and Ngauruhoe and the northern half of Ruapehu.

Among the Great Walks: The Whanganui River Journey. Photo/Getty Images

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Rescue missions

Smith says with the huge growth in numbers on the track, more people end up needing to be rescued, and stories of ill-prepared walkers venturing into the alpine terrain wearing inadequate footwear and clothing are legion. He recalls two young men – whose knowledge of New Zealand’s natural environment appeared to be largely informed by watching the Lord of the Rings films – attempting the track in jandals.

“People think because it’s summer, it will be okay to do it in shorts and a T-shirt,” says Smith.

DoC boosted the number of toilets on the track in time for the current season, but not before the existing facilities were shown to be inadequate. Smith describes toilet paper littering the terrain for 20m either side of the track just after it enters the bush on the final downhill leg to the Ketetahi car park.

And the threat of eruption from ­Tongariro and Ngauruhoe is ever-present. “If the mountain blew tomorrow, hand on heart, we would not know how many people were on the mountain,” says Smith. DoC works closely with GNS to monitor volcanic activity, and an experimental early-warning system has been installed, but Smith says an eruption remains a “huge risk”.

In 2012, the Te Maari Crater vents on the northern flanks of the Tongariro massif erupted in August and November, and in October the same year, a small lahar poured from near the eruption site down to State Highway 46. The track, which runs within 2km of the vents, was ­seriously damaged and had to be closed. The larger of the two eruptions, in August, was fortunately in the off season and no one was hurt, but DOC technical adviser Harry Keys has described the event as a “major near miss”. Volcanic rock went through the roof of the empty Ketetahi Hut: had it occurred in the busy tramping season, there would certainly have been fatalities. There was also a near miss when four scientists left the vent just a few minutes before the smaller November eruption.

“We got away with it,” says Smith. “But we know Ngauruhoe is way overdue. It hasn’t erupted since 1975, and when you look at historic times, it has always ­averaged about every 25 years.”

Cap on numbers

He thinks the days of unlimited access to the Tongariro Alpine Crossing are over, and that some kind of booking system, with a cap on numbers at about 500 people a day, is essential. Indeed, it has been recognised for years that the pressure on the track is unsustainable, but growth has continued unabated. In 2007 – long before the current boom – a Government-funded report found the “social carrying capacity” of the track was about 550 people a day. Toilet waste, the effect on tracks and vegetation, and the cultural effect of large numbers of visitors in an area of huge importance to Maori were the key issues identified.

Sanson says DoC is having discussions with the hapu about limiting numbers, but his department has few tools at its disposal. The Conservation Act bars it from limiting access and charging for entry into national parks. The principal means of controlling visitor numbers is through a booking system for huts on the Great Walks and other hot spots, such as Angelus Hut in Nelson Lakes National Park. But the Tongariro Alpine Crossing is a day walk, so using hut bookings as a rationing tool is not available.

Options such as a “park and ride” system, where visitors would pay to park their cars and then be transported to the track end, are under discussion. This would generate revenue and could act as a de facto brake on the number of walkers. But Smith is well aware that such a system could provoke a backlash from New Zealanders who have an expectation of open access to their national parks and are likely to resent having to pay for road-end parking and being herded onto buses.

“We as Kiwis have this ethos that the parks are our parks, and we should be able to access them when we want to … Kiwis who are holidaying around Taupo expect to be able to wake up in the morning and decide to go and run off the Christmas pudding by doing the crossing. But we can’t please everyone, and whatever decisions we make, the poor old Kiwis will be a bit brassed off.”

Any move to limit numbers is also likely to face pushback from the 40-odd businesses that operate under guiding and transport concessions from DoC and whose livelihoods are tied to the growth in visitor numbers.

Tourism surge

Behind the scramble for solutions to crowding at places such as the Tongariro crossing and Milford Sound is a tourism surge that has caught the industry flat-footed. Chris Roberts, chief executive of the lobby group Tourism Industry Aotearoa, says the inbound tourism market has been growing at double-digit rates for the past two years, after relatively little growth in the years following the global financial crisis. “Cheap airfares, an 800,000 increase in the number of international airline seats into New Zealand since 2014, and growing numbers of middle-class Chinese, Southeast Asians and Indians with the money and desire to explore the world are behind the boom.” Roberts says worldwide tourism growth is running at about 5% a year, so New Zealand is well above the average.

The strong tourism sector has come to the rescue of an economy that might otherwise have been more severely knocked around by the dairy downturn, but many observers are now speaking of risks to the industry’s “social licence to operate”. Once regarded as an environmentally benign industry, and talked up by green groups who saw it as a job-rich alternative to extractive sectors such as mining and native-forest milling, it is now likened to “dirty dairying” by the likes of Forest & Bird advocacy and campaign manager Kevin Hackwell.

The rate of visitor spend has increased faster than the growth in numbers, suggesting the long-promised drive for higher-value tourism is having some success, but Hackwell challenges the assumption that a further 50% increase in numbers is good for the country, and says the industry has given little thought to how to manage the social and environmental downsides.

Small-town blues

Westland Mayor Bruce Smith looks with approval from his office window onto a Hokitika town centre abuzz with visitors, busy cafes, full motels and full employment. But in other small towns, tourism growth has far outstripped planning and investment. In the tiny Central Otago settlement of Tarras, on the busy route from the Mackenzie Basin to Queenstown, Wanaka and Alexandra, evidence of the tourism boom in recent years has came in the form of human excrement in the grounds of the 11-pupil primary school. Because the village has no public toilets, visitors would wander into the school grounds – often during class time – to relieve themselves.

Last year, the Government announced a $12 million infrastructure fund to help small rural councils whose facilities were groaning under the weight of numbers. It was widely acknowledged as inadequate for the scale of the problem, but one of the ­beneficiaries so far has been Tarras: the ­Central Otago District Council recently received $247,280 to help fund the construction of public toilets.

There is plenty for the tourism industry to be pleased about – not least the fact that it has surpassed dairying as the country’s biggest export industry – but the warm welcome traditionally offered to overseas holidaymakers may be starting to cool. After two years of rapid growth, high-profile ­stories of road crashes involving tourist drivers, controversy over litter and human waste from uncontrolled freedom camping and crowds in traditional Kiwi holiday spots, one in three New Zealanders is unhappy about the projected future growth in numbers, according to Tourism New Zealand’s latest Mood of the Nation survey.

“The proportion of Kiwis who think the current number of tourists is putting too much pressure on the country has almost doubled in the past year,” the survey found.

In Otago – home to some of the country’s busiest tourist destinations, including Queenstown, Arrowtown and Wanaka – 27% say there are already too many tourists, and 45% feel the rate of growth is too high.

Against the background of creaking local infrastructure, rising alarm from the conservation sector about the impact of visitor numbers on the DoC estate and mounting public concern, four of the industry’s biggest operators last year clubbed together to hire the global consulting giant McKinsey & Company to come up with ideas on how to cope with the coming growth.

The report, which was presented to Prime Minister and Tourism Minister John Key shortly before he resigned, arrived at the “conservative” conclusion that there was an immediate $100 million shortfall in key infrastructure – transport, toilets, car parks, sanitation and environmental protection – in 20 council areas where booming tourism numbers have outpaced investment by local ratepayers. It calculated that $100-150 million a year over the next decade was required to ensure the “new generation” of tourism infrastructure was “future ready”, including $60 million a year to upgrade busy tourist highways with slow bays and scenic stops, and provide Wi-Fi on common routes.

It proposed that the funding gap be met from some of the billions collected in GST from international tourists ($1.14 billion in 2016, up 20.4% on the previous year) and through an increased departure tax and a bed tax on accommodation providers, including campervans, cruises and Airbnb.

A bed tax set at 2% plus an extra $5 on the existing border clearance levy of $18.76 (introduced last year to pay for customs and biosecurity) would generate $65 million a year if implemented this year. If matched dollar-for-dollar by the Government, that would create an annual pool of $130 million for investment in tourism infrastructure. McKinsey recommended this should be managed and allocated by a specially constituted Crown agency.

The report also suggested new ways for local councils and DoC to extract more revenue from tourists through user charges, and in doing so helped shed light on how little overseas tourists pay to use taxpayer-funded national parks: user charges levied by DoC amount to only 5% of the department’s annual revenue, compared with 20% collected by similar bodies in Australia and the US and 18% in Canada.

Free ride

As it stands, tourists pay nothing to access the DoC estate unless they are using huts. Even high-end facilities such as the Hooker Valley track at Mt Cook and the sealed walkways around the Pancake Rocks at Punakaiki are free, because the department’s governing legislation prohibits charging. And where DoC can levy a charge, such as at huts or providing concession rights for tourism operators on conservation land, it can only recover costs, not make a profit.

Even the feted Great Walks – heavily marketed by Air New Zealand through a partnership with DoC – cost $3 million more to maintain than they earned in hut fees last year, although Sanson says if concession income from private businesses who operate on the walks is included, they break even.

As the McKinsey report said, “Tourists demand these experiences heavily, and currently there is no mechanism for them to pay to operate, maintain and develop the infrastructure they use. The cost is borne by the asset owner.” It concluded DoC could ramp up its hut fees, and New Zealanders could be charged a lower rate than overseas visitors. It pointed to international comparisons such as the $342 a night charged for a bed in a lodge at the Rocky Mountain National Park and $127 at Grand Canyon National Park, against a top price of $54 in DoC huts on the premier Great Walks.

The report proposed car-parking fees in lieu of national park entry fees and, in the longer term, the introduction of entry fees for overseas tourists to busy areas such as Milford Sound (although this would require a law change). It also suggested bundling up DoC’s Great Walks and privatising them – a recommendation that has been widely panned because of its failure to acknowledge that the value of the walks and associated facilities derives largely from the biodiversity and landscape qualities of the national park environments in which they sit.

The report’s core recommendation of a tourist tax collected at the border and levy on accommodation has raised predictable hackles from the sector. The TIA’s Chris Roberts complains that overseas visitors are already being “fleeced” by GST, and very little of the $1.14 billion collected from them is reinvested into tourism and conservation infrastructure. However, he says the industry could “swallow” a border and bed tax “as long as the Government throws in a fair share as well”, and provided a sound structure is set up to ensure good spending and investment decisions are made.

Despite the controversy surrounding some of the McKinsey proposals, the report has been generally welcomed as a much-needed platform for new thinking about how to shore up the standard of facilities before the small towns and national parks that carry much of the load start to sag under the weight of numbers, and before the tourist experience begins to seriously suffer.

But some observers remain frustrated by the pace at which the issues are being confronted. Warren Parker, who chairs the Conservation Authority, fears that unless DoC can get extra revenue to meet the demands from tourist numbers, pressure on the department’s core biodiversity work will inevitably increase. The authority, a statutory body that provides advice to the minister, has been pressing DoC to lift its revenue wherever it can – for instance by ensuring tourism concessionaires are paying a decent price for the right to operate on public conservation land, and clamping down on illegal guiding operations that are said to be rife in areas such as Mt Cook.

About 70% of all international holidaymakers visit the conservation estate, and the tourism sector earned $14.5 billion from foreign tourists last year, but DoC generated only $16.4 million from recreational and tourism charges.

“The tourism sector relies on DoC to provide a standard of facilities that if DoC can’t afford to maintain will lead to a degraded experience and affect visitor numbers,” observed the minutes of a meeting of the Conservation Authority attended by Tourism Industry Aotearoa, the Ministry of Business, Innovation and Employment and DoC last year. “There needs to be a better understanding of the real costs of increased tourism numbers on DoC and how much leakage there is [unpaid fees, etc] that could be captured.”

As Parker told the Listener: “At the end of the day, somebody has to pay, and that somebody should not be the New Zealand taxpayer.”

Supply and demand

Others wonder why the industry is making such heavy weather of a problem that comes down to simple supply and demand. Mike Simm, who chairs the Waitangi National Trust management board and serves on the Conservation Authority, calls it “economics 101”.

“Demand is regulated by pricing, and that’s the reality we have to face up to. I think it’s the reality the industry is waiting for. They expect it.”

He believes the pricing system introduced at Waitangi last year holds lessons for areas of the DoC estate where overcrowding is a problem. With the opening of the new Waitangi museum last year, a three-tier ­pricing model was introduced for the Treaty grounds: overseas visitors pay $40, New Zealand visitors $20 and local people who commit to being a “friend” of Waitangi pay $5 for an annual card. The entry fee includes a guide.

Simm says visitor numbers have remained steady but revenue has increased 30%, and the feedback from visitors shows they are learning more and having a more satisfying experience. Six thousand locals have signed up to be “friends” of Waitangi, which calls for an undertaking that they will act as ambassadors for the site and bring their fee-paying New Zealand and international visitors through.

He thinks such a model could be replicated successfully in parts of the heavily used DoC “front country”, such as the Great Walks and busy day walks, with international visitors paying more and a “DoC ambassador” scheme developed for New Zealanders. Part of the package would include more guides and educational input about the natural environment. “So the whole experience would be more fulfilling,” says Simm.

Veteran adventure tourism consultant Dave Bamford, one of the organisers of a major 2016 conference at Mt Cook focused on the impact of tourism on sensitive natural environments, thinks there are only a dozen or so places accounting for 3-4% of the DoC estate that are under serious pressure – among them Milford, Tongariro, Franz Josef and Fox Glaciers, Huka Falls, Mt Cook and Cape Reinga. In these places, he says, pilot schemes such as park-and-ride systems to control numbers and generate revenue should be introduced.

“Let’s have some rangers at the Ketetahi [Tongariro Crossing] road end. When you have warm bodies, representing the area, whether it be tangata whenua or DoC staff, that changes the whole experience and helps minimise the effects. At places such as Milford [Sound], Hot Water Beach in Coromandel or the Tongariro crossing, if you can solve the transport issues by closing the roads [to private cars] and using buses, you are part-way there. They do this in places such as Tasmania, where the bus drivers are story­tellers who tell you about the place and the land and the people.

“But I get disappointed at the slowness in addressing these issues.”

DoC and the TIA say they are working together on finding solutions, and that innovative ideas are being batted around. “We have two fundamental challenges,” says Sanson. “How to reverse our decline in biodiversity, and how to prepare conservation facilities for a 40-50% increase in tourism.”

DoC has developed a new visitor strategy, camping fees have been bumped up and toilet facilities in key areas expanded. Sanson says new “products” are being considered to expand the tourist offering, including new Great Walks in places such as Northland, Taranaki, Gisborne and the Catlins, and a new brand of “Great Day Walks”. The department is also studying US national park booking systems that would allocate a proportion of hut beds to New Zealanders.

“Conservation land goes to the heart of our identity as Kiwis, so I think resolving this is going to be quite a complex policy debate between our right as Kiwis to get out there and experience it and [demand from 10% more international users ] every year on our Great Walks. And as more international visitors have come into New Zealand and the likes of the Routeburn, Milford and the Kepler are booked out, a whole lot of other places have become very attractive, like Lake Angelus, Blue Lake [Nelson Lakes National Park], the Copeland hot pools [ South Westland] and Mt Holdsworth [Tararua Forest Park],” says Sanson.

“New Zealand has open skies, and so you cannot switch it off.”

The nine Great Walks

Milford Track, Fiordland National Park

Routeburn Track, Fiordland and Mt Aspiring National Parks

Kepler Track, Fiordland National Park

Rakiura Track, Stewart Island/Rakiura National Park

Heaphy Track, Kahurangi National Park

Abel Tasman Coast Track, Abel Tasman National Park

Tongariro Northern Circuit, Tongariro National Park

Lake Waikaremoana Track, Te Ure­wera National Park

Whanganui Journey, Whanganui National Park

* The nine Great Walks will become 10 next year on completion of the 45km Pike29 Memorial Track from Blackball to Punakaiki in the Paparoa National Park. The track will include the Pike River area as a memorial to the 29 men who died in the 2010 mining disaster.

How we compare

$342 a night for a bed in a lodge at the Rocky Mountain National Park

$127 at Grand Canyon National Park

$54 in DoC huts on the premier Great Walks

This article was first published in the January 14, 2017 issue of the New Zealand Listener. Follow the Listener on Twitter, Facebook and sign up to the weekly newsletter.